Product life cycle

Product Life Cycle (PLC) Simplified: Stages and Examples

by Olateju Oluwatomisin

A product life cycle (PLC) is a theoretical framework that describes the stages a product goes through from its introduction to the market until its decline. 

The typical stages in a product life cycle include introduction, growth, maturity, and decline. A product experiences sales, market acceptance, and competition changes during these stages. 

Is it Necessary to Learn the Product Life Cycle?

Yes, it is necessary to learn PLC. Companies use PLC analysis to make strategic decisions about marketing, pricing, and product development based on the product’s position in its life cycle.

Also, understanding the product life cycle is crucial for businesses for the following reasons:

  1. Strategic planning

It helps in strategic planning by providing insights into a product’s different stages, enabling companies to plan marketing, distribution, and pricing strategies accordingly.

  1. Resource allocation

Companies can allocate resources more effectively by recognizing the varying needs of a product at different stages. For instance, during the introduction phase, heavy investment may be required for marketing, while in the maturity phase, cost efficiency becomes a priority.

  1. Market dynamics

It helps businesses understand market dynamics at different stages, including customer preferences and competitive forces. This knowledge is valuable for adapting products and strategies to meet evolving market demands.

  1. Innovation and improvement

Recognizing when a product is entering the maturity or decline phase prompts companies to focus on innovation and product improvement. This can involve introducing new features, rebranding, or finding new uses for the product.

  1. Risk management

Businesses can better manage risks associated with product life cycles. For instance, diversifying product portfolios or planning to introduce new products can offset the decline of existing ones.

  1. Financial planning

It aids in financial planning by clarifying revenue and cost patterns throughout a product’s life. This information is vital for budgeting and forecasting.

  1. Customer relationships

Understanding where a product is in its life cycle helps manage customer relationships. For instance, customer education may be crucial during the introduction phase, while customer loyalty programs may be more effective in the maturity phase.

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Who Needs the Knowledge of Product Life Cycle?

The following stakeholders benefit from understanding the product life cycle (PLC). They are grouped into three main clusters:

  1. Strategic decision-makers

They include:

  •    Top-level executives
  •    Product managers
  •    Marketing professionals
  1. Operational teams

They include:

  •   Sales teams
  •   Financial analysts
  •   Supply chain managers
  •   Customer service teams
  1. External stakeholders

They include:

  •    Investors
  •    Business partners
  •    Suppliers

Each cluster uniquely leverages PLC insights for strategic planning, operational efficiency, and external relations.

Read also: A Free Guide to Successful Product Marketing for Nigerian Businesses

Stages of Product Life Cycle 

There are four widely accepted stages of the product lifecycle. They are:

  1. The introduction stage

The introduction stage is like the big reveal for a new product. It’s all about getting the word out. At first, sales are modest, and making a profit is tough due to initial costs. 

It’s the time for splashy advertising and ensuring everyone knows what’s cool about the product. Pricing can vary—some companies go for lower prices to grab attention, while others charge more if people are willing to pay. 

Companies pick specific places to sell the product and give lots of support to encourage people to try it. The goal is to catch the eye of early fans who love trying new stuff. Even if there are few similar products, companies must quickly improve based on customer feedback. 

The introduction stage needs a decent budget to spread the word, and profits take time to grow. But doing well in this early phase sets the product up for success, laying a strong foundation for the future. 

  1. The growth stage

The growth stage is when a product becomes super popular—everyone wants it, sales shoot up, and companies start making good money. But watch out because there’s more competition trying to get in on the action. Companies work hard to improve their product, and you see it everywhere. 

Prices might stay the same or change a bit. It’s when a product goes big, sales soar, competition heats up, and profits boost.

Read also: What is a Barcode and How Do You Create One for Your Product?

  1. The maturity stage

The maturity stage is like the settled chapter in a product’s journey. It’s been around for a bit, and things find a steady pace—sales level off and do not fluctuate as before. 

Many other products are in the mix, so companies need to get creative to stand out. They might tweak the product, add cool features, or offer stellar customer service to keep folks interested. 

Prices usually hang tight, and the market is packed with this product. To keep the cash flowing, companies need to be savvy with costs and find ways to keep customers returning, maybe with special deals or neat programs. 

Even though it’s not as wild as the start, this stage is about keeping things steady, making a solid profit, and trying fresh Ideas to stay on everyone’s radar. 

  1. The decline stage

The decline stage is akin to the quiet winding down of a product’s narrative. It’s that phase when sales start tapering off, and the product loses some of its former popularity. This is usually due to increased competition and technological change. 

Since the product isn’t in the limelight anymore, companies might dial back on advertising, and prices could dip. Keeping profits in check becomes a priority, leading to some belt-tightening. 

In certain cases, companies often bid farewell to the product when it’s not generating much revenue. It’s a pivotal time when choices must be made—whether to stick with the product, venture into something new, or gracefully bow out. 

This stage feels like the concluding chapter, urging companies to make wise decisions as they wrap up the product’s journey.

Companies should prioritize continuous innovation, market diversification, and effective marketing to avoid the decline stage trap. They must also actively seek customer feedback, form strategic partnerships when necessary, and plan for the product’s lifecycle. 

Investing in marketing and public relations helps too, and so is incentivizing consumers through customer loyalty programs.

Read also: How to Create a High-Performing Landing Page for Your Product

An Example of a Product Life Cycle

Picture the Nokia 3310, a classy, non-touchscreen phone that has won the hearts of many. The lifecycle of this product is summarized below:

  • Introduction Stage (2000): It came into the limelight, becoming people’s choice. All thanks to its ruggedity and durability.
  • Growth Stage (2001-2005): Suddenly, it was everywhere, everyone had one. As expected, many competitors joined the party but there was no match.
  • Maturity Stage (2006-2010): It stayed strong while facing newer rivals. The release of mobile phones of similar size with the ability to play music dwarfed the 3310 market. 
  • Decline Stage (2011 onwards): The last batch of Nokia 3310 customers left when Android touch screens took over, forcing the product off the shelf. 

This is the journey or lifecycle of the classic Nokia phone. From tough beginnings to navigating the twists of evolving times.

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Conclusion 

The product life cycle is a simple yet effortful one. It requires product stakeholders to follow the necessary steps to ensure success. 

Each stage has its focus, the introduction phase creates product awareness. The focus at the growth stage is to increase sales by bringing more customers on board and outperforming the competitors.

The maturity stage keeps the product as the Number 1 customer choice by standing out and preventing the slippery slope that leads to the decline stage.

Edited by Priscilla Ajayi.

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